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Lending

Implementation, training and tolerances under the new rule

Recapping a week of TILA-RESPA overload

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This article is part of HW PartnerDirect™. What is this?

Last week we tossed quite a bit over the fence in just a few posts, including implementation, training, and yes, more details on the tolerances of the Loan Estimate form. Let’s revisit really quickly so we can kick this week off.

We rounded out section 16 of the TILA-RESPA Integrated disclosure rule regarding implementation by discussing the training component your organization will face. In the summary published by the CFPB, I think it’s one of the shortest sections – but we as an industry know better than to just think about as two sentences. As we pointed out in last Wednesday’s post, you should be looking ahead to your training plan as your implementation plan starts to take shape. 

Of all the puzzle pieces in the picture of change, this can be challenging depending on the size and geography of your company. There are the obvious questions, such as “How many people will need to be trained?” and “Where are they located?” Then there are the variables that tend to get forgotten until the training execution is around the corner, like “How did the last major training effort go?” and “What were the lessons learned from it that we need to correct this time?”

Here are the points we hit regarding training to help you move things along:

  • Training will be necessary for your loan officers, processors, closing agents, notaries, compliance teams, and quality-control staff, and your vendor management department may need to be brought into the loop as well. Large lenders may need to extend this effort down to the personal banker level in bank branches.
  • Monitor training efforts with your vendors. Make sure the people behind the solutions you depend on will be right there with you on the new information.
  • Use the roles identified during your implementation planning to determine who will need to undergo training, and to what level training will be required.
  • Determine what training modules will need to be created, if it makes sense to do it in-house, and if the investment in face-to-face training is appropriate.

In addition to wrapping up the implementation section, we circled back around with the first of two posts that will close out Section 7 of the TILA-RESPA Integrated Disclosure rule. Highlights of that post are the closing charges that are not included in the zero-tolerance category are considered to be in “good faith” if they do not increase at all or if the following are true:

1.       The sum of charges for third-party services and recording fees ultimately paid by or imposed on the consumer does not exceed the aggregate amount of such charges disclosed on the Loan Estimate by more than 10%

2.       The charge for the third-party service is not paid to the creditor (or an affiliate of the creditor)

3.       The creditor permits the consumer to shop for these third-party services.

We also pointed out a few examples that reinforce those situations, and while not much seems to change in the semantics of those details and illustrations, we called out the changes for this portion of the rule:

  • Creditors will now have to retain evidence of compliance for three years after the later of the date of consummation, the date disclosures are required to be made, or the date action is required to be taken.
  • Records must be maintained establishing that the creditor performed required actions, not just provided disclosures, including differentiating between affiliated and independent third parties for determining the applicable tolerances for settlement charges. 

To wrap up the recap, we also touched on how a solution like Digital Close can help you be proactive to the potential nightmare of the CFPB posting anonymous customer complaints about organizations by employing technology that helps foster a more informed consumer who can feel empowered in closing, rather than possibly pitch a complaint over the fence.

We'll wrap up Section 7 in our second post this week, so stay tuned. As we mention in every post, be sure to visit  www.TILARESPA.com to view a growing body of information and forums where you can ask questions and interact with others in this industry.

All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.

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